Thursday, May 2, 2019

DOWJONES - 02 May 2019


Fundamental Highlights

US indices posted losses on Wednesday as the FOMC meeting slashed market’s priced in expectations of a rate cut thereby prompting a sell off. Interest rates were expectedly held steady and Chairman Powell stated he sees no inclination to move in either direction in terms of monetary policy this year despite soft inflationary pressure which he cited as transient. His comments on the modest growth of the economy was reflected in a strong rise in the ADP employment report however not so much in the missed expectations for the US ISM Manufacturing PMI data. Today, alongside corporate earnings, the US publishes factory orders for March and jobless claims reports.

Technical Analysis

The Dow Index approached the major resistance zone around 26680 before yesterday’s FOMC meeting prompted a decline of 0.61% to end at 26430. Momentum was reversed to the downside as the price broke through the lower trend line of the rising channel to reach support at 26300. To restore the bullish view, the price would have to move above the 26470 level to re-test the highs. The daily RSI reading has formed a lower low while price formed a higher low on the daily timeframe, which could signal an upside recovery should the 26300 level hold as support. Failure to do so will lead the Dow towards lower support levels at 26230 followed by 26170.

Support: 26300/ 26230
Resistance: 26470/ 26590

Chart (H4)